Just last month the Mississippi House of Representatives voted in favor of raising taxes on cigarettes by one dollar per pack. That extra dollar would help pay for the state's short fall in the Medicaid program.

This week that measure died when the Senate Committee on Public Health and Welfare never brought it up. So what happens now?

" We don't have anything to talk over, because the bill's died," said Rep. Steve Holland. "I hate that very much."

The cigarette tax bill would now need a two thirds vote by each chamber to be brought up again.

"We could have resolved this thing but now both are gone, so we have to start from scratch," said Holland.

House Medicaid chairman, Dirk Dedeaux, remains convinced both sides can find a solution.

"I assume the Senate leadership is formulating some kind of plan or solution they can bring to the table," said Dedeaux.

Besides the tax on cigarettes, a tax on hospitals has also been looked at by the governor's office and Senate appropriations committee chair Alan Nunnelee.

"We were getting $90 million a year from the hospitals in this state that turned into $360 million," said Nunnelee. "I think we're committed to try to find a way to get that roughly $90 million from the hospitals."

House leadership, however, doesn't favor that plan. So what options are left?
Even though the cigarette tax option is a 'no go', because it didn't make it out of the Senate committee, the lieutenant governor says there's no need to panic, because they're going to stay here until they fund Medicaid.

Phil Bryant is looking at reducing the number of Mississippians on Medicaid.

"We'd like to reduce the number of people on Medicaid by finding them jobs and using the insurance bill that the governor has to try to bring them together to find a job for them to put them on private insurance so that they can go to work and get off Medicaid," said Bryant.

Bryant insists that both House and Senate committee chairmen are talking to work out the Medicaid issue.

The state must fund a Medicaid shortfall of almost $90 million, as well as find a funding source for fiscal year 2009. The federal government pays 75 cents on every dollar the state pays toward Medicaid.